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Crowd funding

Spain's former head of state has effectively crowd-funded his back tax, and now owes the money to his mates, not the Spanish authorities

Mark Nayler

Friday, 9 April 2021, 15:19

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Spain's former king Juan Carlos paid 4.4 million euros in back taxes in February, in a second attempt to regularise his murky finances. But according to online newspaper El Confidencial, he made that payment with individual loans of up to 250,000 euros from friends and associates, rather than from his own fortune. Spain's former head of state has effectively crowd-funded his back tax, and now owes the money to his mates, not the Spanish authorities. To use another analogy, it's as if he's transferred the debt from one massive credit card to several smaller cards - and ones that won't send the bailiffs around to collect repayments.

Four million euros is a huge sum of money to you and me, but it's about a quid for the planet's ninth richest royal, who's reputed to possess a personal fortune of around $2 billion. Even so, Juan Carlos is said to have approached more than fifty wealthy friends last autumn asking for financial support, around twenty of whom eventually pitched in to help with the February settlement. It remains unclear whether this was to provide a sum that Juan Carlos couldn't pay himself - meaning that estimates of his personal wealth are wildly off the mark, or that he wasn't planning to ever make back payments - or whether it was an arrangement that was advantageous in some other way for the former King and/or his creditors.

The payment they funded was related to eight million euros' worth of private flights, taken between 2006 and 2018, both during and after his reign (Juan Carlos abdicated in 2014). They were paid for at the time by a distant cousin of the former king named Alvaro de Orleans, who used funds from Zagatka, a foundation registered in Liechtenstein - which just happens to be one of the world's top tax havens.

De Orleans' testimony in the ongoing investigation, given to Madrid-based prosecutors via videolink from Monaco last month, portrayed a royal enjoying the good life with funds distributed through offshore entities.

The revelation of the loans compounds the reputational blow dealt to Juan Carlos by his cousin's evidence and casts doubt on the legitimacy of the February payment itself. It will also heighten curiosity, both judicial and public, about the state of the ex-monarch's finances, and cause Spain's royal family further embarrassment.

A group of regional parties are demanding that the Spanish government make public all the details of February's settlement, including the terms on which it was made, what expenditure it was meant to cover and where exactly the four million euros came from.

They're right to do so, because as it stands, the Juan Carlos affair - which already features allegations of money laundering, death threats and espionage - becomes more dodgy and opaque by the week.

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